The Bear Cave #212
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “More Problems at B. Riley (RILY)” and “Problems at an ARK Invest Favorite” and our next premium investigation comes out Thursday, March 21.
New Activist Reports
Spruce Point Capital published on Zillow (NASDAQ: Z — $13.4 billion), a leading online real estate platform. Spruce Point claimed that “new growth initiatives will come with significant near-term and long-term headwinds” and that the company’s “core business model is under pressure from declining web traffic and growing industry litigation poised to disrupt the real estate commission structure.”
Safkhet Capital published an update on Adtalem Global Education (NYSE: ATGE — $1.96 billion), “a for-profit university operator that has benefited from billions in public funds.” Safkhet raised concerns about the company’s online for-profit Walden University and wrote, in part,
“Every single former Walden student we spoke to expressed concerns with institutional delays in program completion. Various methods of determining Walden's doctoral graduation rates average at 30%, compared to the 50% national average. Walden students are paying more, earning less, and creating greater potential losses for taxpayers due to their lower repayment capacity.”
Old Time REITster published a follow-up article on Blackstone Mortgage Trust (NYSE: BXMT — $3.51 billion), a mortgage REIT focused on commercial real estate in North America, Europe, and Australia. Old Time REITster alleged the company was likely to trip its debt covenants in the first half of this year and noted the percentage of performing loans in its portfolio has declined from 99% in September 2022 to 93% today, with more declines likely to follow.
Gotham City Research published an update on Grifols (NASDAQ: GRFS — $5.77 billion), a Spanish pharmaceutical company. The update focuses on a roughly $300 million loan between Grifols and a related party classified vaguely as “other financial assets with other related parties.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of New York Community Bancorp (NYSE: NYCB — $2.47 billion) will resign after one month in the role and transition back to serving as Chair of the Board. This week, the bank also announced a $1 billion investment from firms including Steven Mnuchin’s Liberty Strategic Capital, Hudson Bay Capital, and Reverence Capital Partners. In the last few weeks, the bank has had two board resignations and disclosed “material weaknesses in the company’s internal controls related to internal loan review.”
CFO of Funko (NASDAQ: FNKO — $361 million) resigned after one year. The company has had four different CEOs and four different CFOs in the last five years.
CFO of Cerence (NASDAQ: CRNC — $586 million) resigned after nearly two years but will remain on the board. In May 2022, the company’s predecessor CFO, Marc Montagner, resigned after just four weeks on the job. In February 2022, the company’s General Counsel and the CFO before Mr. Montagner, Mark J. Gallenberger, resigned after a little over two years. The company is audited by BDO USA.
CFO of NMI Holdings (NASDAQ: NMIH — $2.37 billion) is departing due to “an involuntary termination without cause” after nearly two and a half years. The company is on its fifth CFO in the last ten years and is also audited by BDO USA.
Jon M. Huntsman Jr., board member of Mobileye Global (NASDAQ: MBLY — $22.3 billion), resigned after one and a half years “due to his other professional responsibilities.” Mr. Huntsman Jr. previously served as the governor of Utah and was also later the U.S. ambassador to Russia and China, the only individual to ever hold both positions. Mr. Huntsman Jr. continues to serve on the boards of Ford and Caterpillar.
Chairman of DocGo (NASDAQ: DCGO — $401 million) “stepped down” after nine years “due to his desire to focus on his family and personal pursuits.” In January, Fuzzy Panda accused the company of a series of ethical lapses such as Medicare fraud, billing fraud, forging documents, and firing whistleblowers.
Chief Marketing Officer of Chegg (NYSE: CHGG — $842 million) retired after thirteen years. In October 2023, the company’s CFO also retired. In January, The Bear Cave called Chegg “a billion-dollar company headed to zero.”
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Chemours Executives Improperly Shifted Deals to Boost Their Pay, Probe Finds” (WSJ)
“Now the company said the investigation found that the executives took steps to delay payments to some vendors during the fourth quarter of 2023 into the first quarter of 2024. In addition, Chemours said the executives sped up the collection of receivables, so the cash would come into Chemours during the fourth quarter instead of the first quarter.”
“New Clues Emerge About SEC’s Interest in Hospital Landlord MPT” (WSJ)
“It seems like a simple question for Medical Properties Trust to answer: Is the company the subject of a Securities and Exchange Commission investigation? The nation’s largest hospital landlord has declined to say. But a new disclosure in the company’s latest annual report, filed last week, makes reference to ‘an increase in SEC enforcement activity and government investigations relating to certain of our assets and tenants.’
…The SEC typically refuses to comment on pending investigations. Investors have a trick for trying to get an answer: file a public-records request about the company. If the SEC rejects it, saying that providing the records could interfere with law-enforcement activities, that is a sign that there could be an investigation.”
“SEC Charges Skechers with Making Undisclosed Payments to Executives’ Family Members” (SEC)
“According to the SEC’s order, from 2019 through 2022, Skechers did not comply with related person transaction disclosure requirements when it failed to disclose its employment of two relatives of its executives and did not disclose a consulting relationship involving a person who shared a household with one of its executives. Furthermore, according to the SEC’s order, for multiple years, Skechers failed to disclose that two of its executives owed more than $120,000 to the company for personal expenses that had been paid for by Skechers but not yet reimbursed by the executives.”
Tweets of the Week
Until next week,
The Bear Cave